An employee may sue an employer, in federal or state
court, for violating the minimum wage or overtime provisions of the
FLSA or for retaliating against an employee for exercising rights
under the FLSA. And remember, individual owners, managers, and directors
may be sued individually under the FLSA. However, an employee may
not personally bring a suit for recordkeeping violations.
Time limits. Suits to enforce nonwillful
violations of the FLSA must be brought within 2 years after the accrual
of the cause of action. Typically this means that an employer’s period
of exposure is measured by counting backward 2 years from the date
the lawsuit is filed. The limitations period for willful violations
is 3 years.
Damages. The damages available to
employees in FLSA actions are potentially huge. The available civil
remedies include all unpaid compensation for time worked but not paid,
or time paid at an incorrect rate, mandatory liquidated damages (equal
to the amount of the unpaid compensation), equitable relief (such
as reinstatement), and attorneys’ fees. Employers that have not kept
accurate time records (such as in cases of employees misclassified
as exempt) face even greater exposure. In such cases, an employee
can basically testify to any number of hours worked per week, and
the burden is on the employer to prove that a different (lesser) number
of hours was actually worked by the employee.
Employees suing under the FLSA cannot recover compensatory
or consequential damages (such as for emotional distress, loss of
enjoyment of life, or lost opportunities). Nor are punitive damages
generally available. However, some courts have held that punitive
damages are available for violations of the FLSA’s antiretaliation
provisions. This is because, although the FLSA limits damage claims
for minimum wage and overtime reimbursement claims to unpaid compensation
and an additional equal amount as liquidated damages, the damage provision
for retaliation claims is open-ended and allows “such legal or equitable
relief as may be appropriate to effectuate the purposes of [the Act]....”
Given the open-ended nature of this provision, plaintiffs have attempted
to seek punitive damages by filing retaliation claims, and the courts
have been quite receptive. However, other courts have rejected such
Employers should also be aware that, unlike in other
forms of employment litigation, calculation of damages is almost totally
objective and based on a set formula. There are generally no mitigating
factors or offsets available against back wages owed an employee.
Arbitration of FLSA claims. Employees
covered by a collective bargaining agreement are entitled to bring
FLSA lawsuits in federal court without exhausting the grievance procedure.
Releases. Employers attempting to
negotiate settlement of a potential FLSA claim with an employee before
litigation or during the course of litigation must exercise extreme
caution, since releases of FLSA claims for back wages have generally
been held to be unenforceable.
Defenses. There are several affirmative
defenses available to employers. (An “affirmative” defense is one
that the employer has the burden of proving.) Statutory defenses include
statute of limitations defense and two good-faith defenses.
An employer should assert the statute of limitations
defense when it appears that the employee bringing the suit was employed
for a longer period of time than covered by the applicable 2- or 3-year
Good-faith defenses. An employer
will be completely relieved of liability “if he pleads and proves
that the act or omission complained of was in good faith in conformity
with and in reliance on any written administrative regulation, order,
ruling, approval, or interpretation” issued by the administrator of
the Wage and Hour Division of the DOL. In other words, an employer
is protected from liability if it, in good faith, relies on the agency’s
interpretation that is subsequently held to be wrong.
An employer may avoid otherwise mandatory liquidated
damages if it demonstrates that its compensation practices were undertaken
in good faith. At the most, an employer’s showing of good faith with
reasonable grounds for believing that it was not in violation of the
act will allow a judge to exercise discretion to deny or reduce liquidated
damages. This does not affect attorneys’ fees and costs. To prevail
under this defense, an employer must show that:
• The act or failure to act must have been in good faith, and
• It had reasonable grounds for believing that the act
or omission was not in violation of the Act.